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DEFENSE ACQUISITIONS Further Actions Needed to Improve Accountability for DOD’s Inventory of Contracted Services

DEFENSE ACQUISITIONS Further Actions Needed to Improve Accountability for DOD’s Inventory of Contracted Services

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DEFENSE ACQUISITIONSFurther ActionsNeeded to Improve Accountability forDOD’s Inventory of Contracted Services
Report to Congressional Committees
 April 2012
United States Government Accountability Office
United States Government Accountability Office
Highlights of  GAO-12-357,a report to congressional committees
April 2012
Further Actions Needed to Improve Accountabilityfor DOD's Inventory of Contracted Services
 Why GAO Did This Study
DOD relies on contractors to performmany functions, which can offer benefits for DOD. GAO’s work hasshown that reliance on contractors tosupport core missions, however, canplace DOD at risk of contractorsperforming inherently governmentalfunctions.In 2008, Congress required DOD tocompile and review an annualinventory of contractors working under contracts for services. The 2010defense authorization act directedGAO to report for 3 years on theseinventories. In January 2011, GAOreported on limitations to DOD’sinventory approach. For this report,GAO assessed (1) DOD’s progress inaddressing these limitations and(2) the extent to which the militarydepartments addressed instances of contractors performing functionsidentified as inherently governmentalduring reviews of their fiscal year 2009inventories. GAO reviewed DODguidance, interviewed acquisition andmanpower officials, and assessed 12instances from a nongeneralizablesample in which the Air Force and Army determined that contractors hadperformed inherently governmentalfunctions.
 What GAO Recommends
GAO recommends that the militarydepartments and components developguidance that provides for clear lines of authority, responsibility, andaccountability for conducting aninventory review and that the Army and Air Force resolve known instances ocontractors performing inherentlygovernmental functions. DOD largelyagreed with GAO’s recommendations.
 What GAO Found
The Department of Defense (DOD) made a number of changes to improve theutility of the fiscal year 2010 inventory, such as centrally preparing contract datato provide greater consistency among DOD components and increasing the levelof detail on the services provided. DOD, however, continued to rely primarily onthe Federal Procurement Data System-Next Generation (FPDS-NG) for theinventory for most defense components other than the Army. As such, DODacknowledged a number of factors that limited the utility, accuracy, andcompleteness of the inventory data. For example, FPDS-NG does not identifymore than one type of service purchased for each contract action, provide thenumber of contractor full-time equivalent personnel, or identify the requiringactivity. As before, the Army used its Contractor Manpower Reporting Applicationto compile its fiscal year 2010 inventory. This system collects data reported bycontractors on services performed at the contract line item level, includinginformation on labor hours and the function and mission performed. DOD officialsnoted that the Army’s current process complies with legislative requirements. InJanuary 2011, GAO recommended that DOD develop a plan with time framesand the necessary resources to facilitate its efforts to collect contractor manpower data and address other limitations in its approach to meetinginventory requirements. DOD concurred with these recommendations. InNovember 2011, DOD submitted to Congress a plan to collect contractor manpower data. DOD officials noted that developing a common data system tocollect and house these data would be challenging given the differentrequirements from the military departments and components. Consequently,DOD does not expect to fully collect contractor manpower data until fiscal year 2016. DOD’s plan, however, does not establish milestones or specify how it willmeet the legislative requirement to identify the requiring activity and the functionand missions performed by the contractor.Military departments’ required reviews of their fiscal year 2009 inventories of contracted services were incomplete. Navy headquarters officials had noassurance that their commands conducted the required reviews, and GAO foundno evidence at the commands it contacted that the required reviews wereconducted. Army and Air Force inventory reviews identified 1,935 and 91instances, respectively, in which contractors were performing inherentlygovernmental functions, though this variation may reflect differences in thedepartments’ approaches to conducting the reviews. In 8 of the 12 Army and Air Force cases GAO reviewed, contractors continued to perform functions themilitary departments identified as inherently governmental. The absence of guidance that provided for clear lines of responsibility for conducting,documenting, and addressing the results of the reviews contributed to theseoutcomes. Further, Army officials cited difficulty in hiring DOD civilians caused byDOD’s decision to freeze civilian full-time equivalents at fiscal year 2010 levels.DOD issued guidance in December 2011 that will require the militarydepartments and components to certify that they have conducted the requiredreviews. The guidance, however, does not clearly establish lines of accountabilityand responsibility within the military departments and defense components for conducting the inventory reviews and addressing instances where contractorsare identified as performing inherently governmental functions.
View GAO-12-357.For more information, contact John P. Hutton at (202) 512-4841 or huttonj@gao.gov or Cary B. Russell at (404)679-1808 or russellc@gao.gov.

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